A Draconian Structural Adjustment for the US?

We are now faced with the threat of the stark economic policies of neoliberalism or its more stark form of the structural adjustment market-driven model being thrust down our throats. This is thanks to the likes of GOP Vice Presidential candidate Paul Ryan’s radical economic “go it alone” Ayn Rand philosophy. Now they want to dismantle the last vestiges of the New Deal in its current form. It’s also what Milton Friedman, of the University of Chicago’s School of Economics, wanted which is that his market-driven policies be imposed on the American people. The right wing on the whole is likely pleased that the United States might finally be the victim of these failed and tragic economic policies that they’ve forced on developing countries where the wealthy benefit and no one else. It’s a home-coming and not a pleasant one.

Friedman’s probably smiling from his grave. Contrary to all the hype, neoliberalism is a failed system throughout the world leading to inequities, environmental degradation and starvation. As Filipino economist Walden Bello said of Friedman, “Indeed, there is probably no more appropriate inscription for Friedman’s gravestone than what William Shakespeare wrote in “Julius Caesar”: ‘The evil that men do lives after them, the good is oft interred with their bones.’”

As September 11, 2012 is upon us, millions around the world and in the U.S. will invoke the September 11, 2001 tragedy at the World Trade Center in New York City and the Pentagon in Washington, DC. Simultaneously, for many there will also be the recollection of the CIA coup in Chile on September 11, 1973, when Chilean President Salvadore Allende was assassinated.

Ironically, the two tragedies are not totally unrelated. In fact, the consequences of these disasters are immense in terms of the implementation of American economic and ideological domestic and foreign policy.

What are neoliberal or structural adjustment economic policies? These are Global North v Global South distinctions on the whole: “neoliberalism” is referred to market-driven draconian economic model in the “developed” Global North; “structural adjustment” refers to the same market-driven draconian model but with distinct policies being enforced, if money is loaned, by the world’s banking system in the so-called “developing” or Global South. The requirements are austere and restrictive than what’s yet appeared in the “developed” economies, although Paul Ryan wants to change that in the U.S. The imposition of structural adjustment on “developing” countries has made them essentially without protections and vulnerable to vulture capitalists.

Market-driven means that the market will solve our problems – place no restraints on the market because as an entity it will determine what’s needed in terms of products and consumption and everyone will benefit as a result, economically and otherwise. Yet, it’s a farce!

Neoliberalism, or its more austere structural adjustment model, was ultimately enshrined as the leading paradigm in the policy guidelines of the World Bank and the International Monetary Fund. In fact, to receive loans, countries were required to curtail government programs that offer services to the people that are then privatized or ended altogether; tariffs that had wisely been in place to protect local business ventures were required to be lifted; and the country was generally required to provide the opportunity for foreign investment in their country, perhaps of land ownership, resource extraction and control of large scale business ventures by foreign interests.

The policies have never created a level playing field. The West’s corporate leaders have dominated as a consequence and while corporate capitalists have thrived, thanks to the World Bank and IMF, many of the poor have starved and been driven deeper into poverty.

Similarly, Paul Ryan’s philosophy is that you’re on your own essentially and to shrink the government programs altogether to insure that you don’t get help and/or to privatize everything. This brings efficiency they say. It would also finally put the nail in the coffin of the New Deal policies. Ryan apparently wants to complete the process except for the military. Who will benefit? Certainly not the 99%.

Friedman knew his neoliberal policies would essentially throw out the popular New Deal programs and that there was no way this would pass the U.S. Congress in the 1970’s. He instead needed another country and most likely a crisis to test his neoliberal policies. Chile was it.

Allende was a socialist and a friend of Cuba’s Fidel Castro. When he became the Chilean president in 1970, he immediately began to restructure the economy with admirable socialist initiatives to advance opportunities for the Chilean masses. For example, his sweeping policies included the nationalization of some large-scale industries such as cooper mining and banking; he took under the auspices of the Chilean government the educational system, the health care system, and offered a free milk program for poor children; he was engaged in land reform and the raising of the minimumwage for Chilean workers. (And you’re right – some of this sounds like our own New Deal under President Franklin Roosevelt in the 1930’s that conservatives have always wanted to dismantle.)

At the time Allende took office, the three major American corporations in Chile were ITT and two American cooper-mining companies Anaconda and Kennecott. ITT owned 70% of the Chilean Telephone Company and funded the right-wing newspaper El Mercurio. They were not pleased with Allende and by all accounts complained to the American government and had, with US government knowledge, given money to Allende’s opponents. There are also reports that ITT channeled money to the CIA to help dismantle the Allende government.

Allende’s threat? It was apparently independence from the United States and offering a new democratic alternative in the region.

Allende also obviously thought Chile was a sovereign nation, but Henry Kissinger (Nixon’s Secretary of State) and the U.S. corporate investors in Chile thought otherwise.

Allende’s policies infuriated Kissinger, who, by all accounts, gave the CIA the green light to get rid of Allende. But Allende also alienated some of the Chilean middle class and some Christian groups who saw his policies of empowering the poor as a threat or as a Cuban style authoritarian state.

So Allende was assassinated, became a martyr, and whatfollowed was devastating for Chileans on the whole.

With coup leader General Augusto Pinochet at the helm,thousands of Chileans became “disappeared”, activists were killed or tortured – tortured I am told to cleanse them of their collective “social contract” mindset.

In the coup, thousands of Chileans were taken to the Chile Stadium in Santiago where many were immediately killed or tortured.

One was the renowned folklorist and guitarist, Victor Jara, who was also a political activist and a member of the Communist Party. Jara was inspired by the folk songs of Chile and other South American countries. Under Allende, he was one of the artists who created the “Nueva Cancion Chilena” revolution of popular music.

At the stadium, where he had performed many times, his ribs were broken by his captors, and his fingers broken as well, to prevent him from playing his guitar. His captors then mocked him by suggesting he play the guitar and he responded by “defiantly” singing part of “Venceremos” (We Will Win). He was then shot 44 times by a machine gun and his body thrown into the streets of a shantytown in Santiago.

In 1977, I was in the office of MIT professor, Dale Runge, in Boston, who had been in the Peace Corps in Chile before the coup and hadknown Jara. While sitting at his desk, he cried as he described what happened. Also a guitarist, Dale had frequently played with Jara and learned from him.

Just prior to his death, Jara had written the following, almost as if he envisioned his fate – here’s some of the verse:

My guitar is not for the rich no,

nothing like that.

My song is of the ladder

we are building to reach the stars.

For a song has meaning

when it beats in the veins

of a man who will die singing,

truthfully singing his song.

There is no way a discussion about Chile in 1973 can be recalled without referring to Naomi Klein’s excellent book, the “Shock Doctrine”. Shocks to countries, says Klein, offer a vacuum for “disaster capitalists” to sweep in for the kill to change and control what and how they want for their benefit. In her book she describes how on September 12, 1973 – the day after the Allende assassination – young economists in Chile had on their desks documents drafted by the Chicago School of Economics on neoliberal policies for Chile. Actually, these Chilean graduates of the Chicago School, known as the “Chicago boys”, under the tutelage of their neoliberal godfather Milton Friedman, were already well informed about the market-driven economic model.

These Chicago “boys” imposed the new policies with a vengeance, which was coupled with the ruthless and murderous Pinochet dictatorship. As Bello said, so much for “political freedom going hand-in-hand with free markets.” Yet, Friedman called it the “Chilean miracle.”

Bello, who was a graduate student in Chile around this time, has also noted, after Pinochet’s 17 years of terror, that “Chile was indeed radically transformed…for the worse”. He said further that:

Chile was the guinea pig of a free market paradigm that was foisted on other third world countries beginning in the early 1980’s through the agency of the International Monetary Fund and the World Bank. Some 90 developing and post-socialist economies were eventually subjected to free-market, “structural adjustment.”

Structural adjustment policies (SAPs), which set the stage for the accelerated globalization of developing country economies during the 1990’s, created the same poverty, inequality, and environmental crisis in most countries that free-market policies did in Chile, minus the moderate growth of the post-Friedman-Pinochet phase. As the World Bank chief economist for Africa admitted, “We did not think the human costs of these programs could be so great, and the economic gains so slow in coming.” So discredited were SAPs that the World Bank and IMF soon changed their names to “Poverty Reduction Strategy Papers” in the late 1990’s. (Bello, 2006)

When, on September 11, 2001, the planes struck the World Trade Center Towers, it’s important to note that they struck at the symbolic heart of the American capitalist system. We lost thousands of innocent workers in this tragic event. It’s also important to note that a plane flew into the Pentagon on the same day, which is the heart of the U.S. military that essentially protects America’s foreign economic ventures and its corporate capitalists. The targets were incredibly symbolic of American imperial arrogance that has tragically destroyed countless countries, communities, families, individuals and environments throughout the world.

As writer Chalmers Johnson would say, the attack on September 11, 2001 would be “blowback” time. He noted that there was only so much that others in the world can take of arrogant economic and aggressively violent U.S. foreign and military behavior.

The aftermath of 9/11 has resulted in significant and costly wars in the Middle East by the U.S. which, coupled with the disastrous deregulation of the banking system, for one, and the economic disaster in 2008, has led to a perfect crisis for the likes of the Friedman neoliberal/structural adjustment followers, like Paul Ryan, to impose their draconian policies on Americans. The situation is the perfect “shock”, as per Naomi Klein, for these disaster capitalists in America to sweep in and create even more havoc then they have already in the U.S. and for them to gain at the people’s expense. This is similar to Chile in 1973 minus the bloody coup. American corporate leaders are probably drooling in anticipation.